1. compute the project profitability index for each investment proposal
Profitability Index is a ratio used to estimate how profitable a project will be by dividing the sum of discounted future cash flows to the initial cost. A project is accepted if the PI > 1 The Profitability Index (PI) measures the ratio between the present value of future cash flows to the initial investment. The index is a useful tool for ranking investment projects and showing the value created per unit of investment. The Profitability Index is also known as the Profit Investment Ratio (PIR) or the Value Investment Ratio (VIR). Answer to: Information on four investment proposals is given below: 1. Compute the project profitability index for each investment proposal. 2. for Teachers for Schools for Working Scholars for The profitability index is calculated by dividing the present value of future cash flows to be generated by a capital project by the initial cost, or initial investment, of the project. The initial investment is the cash flow required at the start of the project. The profitability index is a technique used to measure a proposed project's costs and benefits by dividing the projected capital inflow by the investment. Calculate the profitability index. Solution Profitability Index = PV of Future Net Cash Flows / Initial Investment Required Profitability Index = $65M / $50M = 1.3 Net Present Value = PV of Net Future Cash Flows − Initial Investment Rquired Net Present Value = $65M-$50M = $15M.
23 Oct 2016 Let's suppose you want to earn 8% per year on your investment. When the profitability index is less than 1, the project destroys value -- it
1. The formula for the project profitability index is: Net present value of the project. Project Investment required by the project Project 1: $66,140 ÷ $270,000 = 0.24 best available in terms of the amount of cash inflow generated for each. The Profitability Index is also known as the Profit Investment Ratio (PIR) or the Value If the PI is greater than 1, the project generates value and the company may Company A should do Project A. Project A creates value – Every $1 invested Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) Rank the proposals in terms of preference. Answer to Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal plac
Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.)
The profitability index, also known as the profit investment ratio, is calculated as the ratio of the present value of the future cash flows and the initial investment in the project.
The Profitability Index is also known as the Profit Investment Ratio (PIR) or the Value If the PI is greater than 1, the project generates value and the company may Company A should do Project A. Project A creates value – Every $1 invested
The profitability index (PI) refers to the ratio of discounted benefits over the discounted costs. The formula used for calculating the Profitability index is: to infer the Internal Rate of Return (IRR) which arises when Profitability Index equals 1. An investment project or proposal is considered to be profitable if it features a NPV of an investment proposal is an estimate of the current value the proposal (1) the expected cash-flow stream that the project will generate over its appropriate discount rate required to calculate the project's detail and the profitability index briefly. This paper First, the present value of each expected cash flow is.
NPV of an investment proposal is an estimate of the current value the proposal (1) the expected cash-flow stream that the project will generate over its appropriate discount rate required to calculate the project's detail and the profitability index briefly. This paper First, the present value of each expected cash flow is.
Example 3 Information on four investment proposals at Tampa Corp is given below from ACC 102 at Angeles University Foundation. Compute the project profitability index for each proposal and rank the proposals in terms of preference. Compute the simple rate of return for 2009.
The Profitability Index is also known as the Profit Investment Ratio (PIR) or the Value If the PI is greater than 1, the project generates value and the company may Company A should do Project A. Project A creates value – Every $1 invested Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) Rank the proposals in terms of preference. Answer to Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal plac Proposal Number Project Profitability Index A.40 B.27 C.52 D.30 Explanation: The project profitability index for each proposal is: Proposal Number Net Present Value (a) Investment Required (b) Project Profitability Index (a)÷(b) A $34,000 $85,200 .40 B $55,000 $202,000 .27 C $49,000 $94,000 .52 D $52,000 $173,000 .30 3. award: 1 out of 1 point Requirement 2: Rank the proposals in terms of preference. 1. Compute the project profitability index for each investment proposal. 2. Rank the proposals in terms of preference.